Marc My Words: Evaluating Vendor Proposals

November 15, 2016

When picking a product or vendor to do work for us, thereare lots of factors to consider. Let’s assume that you did your homework. Yousurveyed the marketplace, selected a small group of vendors that might meetyour needs, and sent them a solidly written RFP. Now that the proposals are in,you have to pick who you are going to do business with.

Before we get into the main criteria, two key points: First,don’t do it alone. Form a committee of your key stakeholders, even yourclients, to weigh in on the decision. Involving them from the start will helpthem take more ownership of the decision. And second, pick finalists, not thewinner. If possible, try to select two to three vendors that meet all your criteria; any one of them wouldbe acceptable. Then picking a winner can be based on some amount of gut feelingand emotion—which one you feel best about working with. And, if your firstchoice is not available, you won’t have to go through a major rework of yourplan to pick an alternate.

Vendor evaluation criteria

Price, of course,looms large in any vendor or product section process. But selecting only on price, i.e., picking the low-costbidder, can be fraught with obvious risks. Even if you are required to selecton price alone, you can mitigate the consequences if you used a sound,well-developed RFP. That would enable you to reject low-cost providers if theirproposals reveal that their deliverables, processes, time frames, etc., do notmeet your needs.

So, in addition to price, here are 10 other important vendorselection criteria you should consider:

Ability, expertise, capacity, and skill.You want a vendor that has the demonstrated smarts, resources, and people to dothe job you are asking them to do at the level of quality (performancestandards) you demand.
Vendor’s understanding of your business andneeds. Look at how much the vendor knows about your problem and yourbusiness or industry. If they are only repeating back to you what you put inthe RFP, that’s a cause for concern. But if they’ve truly taken the time to putthemselves in your shoes, that’s great.
Vendor character. It is fair game tolook at the vendor’s integrity, reputation, judgment, experience, ethics, andefficiency. You may not get this from the proposal, but you should look for itduring pre-RFP meetings and conversations with vendors, and from comments bypast customers.
Vendor history. Look for how the vendorhas performed on prior contracts, especially contracts inside yourorganization. Ask about how it was to work with them.
Commitment. Examine the vendors’commitment to the project in terms of the resources, staff, and time they willdevote to you.
Access. Determine whether you will havereasonable access to vendor senior managers and subject matter experts, andwhether or not the team that’s assigned to you is qualified and “in it” for theduration of the project.
Vendor’s financial stability. It’s wiseto investigate how long the vendor has been in business and what the health oftheir business is. Do a Dun & Bradstreet,Better Business Bureau, or similar analysisif the project is big enough.
Vendor’s ability to conduct businesselectronically. Sometimes, you will want the vendor at your site, but youalso want the vendor to work more efficiently, and at less cost, throughelectronic means (besides, you have other work to do). Assess theircapabilities from communications, production, and project management standpoints.
Vendor products and demos. Whether ornot products and demos were a part of your RFP process, it’s important to lookat the vendor’s prior work and their technology. If you need to get your ITpeople involved in an “under the hood” evaluation, do so.
Vendor’s willingness and ability totransfer knowledge and expertise. It’s likely that you don’t want to bedependent on the vendor forever, so evaluate whether and how the vendor willteach you and your people to do the work. You will have to get off the trainingwheels sooner or later.

Use this as a checklist with your team and, of course, addand modify the criteria as you see fit. You may want to use your original RFP asan input to your evaluation. Sometimes, the best vendors for you will beobvious; other times, not so much. Although the process of vendor evaluationcan pretty much be standardized, each instance has its own unique challengesand opportunities. Watch out for them.